Bancon2012 in a nutshell

The last weekend of November saw the men in black – bankers in their formal best, troop into Mariott Pune for BANCON 2012, to review, reform, and rethink banking. Bank of Maharashtra had the privilege of hosting it in partnership with Indian Banks Association (IBA). Day 1 witnessed a flurry of activity with the Hon’ble Finance Minister, Shri P Chidambaram, inaugurating the meet with the traditional lighting of the lamp, releasing a report by McKinsey & Co, launching the Ru-Pay card and presenting it to five farmers and also a single number for financial assistance. Ru-Pay jointly with NABARD gives farmers the opportunity of financial inclusion and its catch jingle, Chal pade gaon, toh chal pade India aptly summed up its theme. *99# will empower users through mobile banking. The minister began his impressive speech by comparing the financial system as the lifeline of any economy, with banks being the heart in a body. He spoke about farmers, students and women as good customers for their repayment record. His interesting observations included how people in non-metros want to borrow amounts as small as 10,000 to upgrade their set-up. He urged banks to channelize this demand and regional banks to maintain their own distinct flavor; even after consolidation of top banks, when India becomes the third largest economy.

Post-lunch, when Chief Minister, Shri Prithviraj Chavan took to the dais, he also shared interesting nuggets like the scope for voice-input technology and how credit to farming increased by 47% due to commercial banking. Many speakers lauded NABARD for its phenomenal work. A cultural programme was lined up for the evening consisting of the fisherfolk song amongst others by the Gandharva troupe and popular Bollywood numbers belted by Sa Re Ga Ma Pa participants.

Day 2 was action packed with parallel sessions. Granularity as a way of thinking was the focus and how standardization by banks works against it. Dr Subir Gokarn, DG, RBI, enthralled the audience by reflecting the reality about India’s skyrocketing demand for gold and how Gold Accumulation Plan, Gold Linked Account, Gold Pension Plan, ETFs could work in this scenario.

The audience radiated inner peace with the smile guru Shri Sri Sri Ravi Shankar’s tips on how to build an inhibition-free intellect and violence-free society. Stay in the present, just like a child, he advised and strongly made a case against Indian society giving business a bad name. Meditation helped the sleep-deprived, stressed bankers prep up for the marathon round of sessions in the afternoon. 

 

 
Mr H R Khan, DG, RBI stated 40% in India have a bank account; 13% have credit cards and 2% have debit cards and elaborated on GIRO system, BBAN and E-BAAT. Shri Naro Narain Meena, Hon’ble Union Minister, State for Finance explicitly mentioned how entrepreneurs could use a good blend of innovations and technology.

Finance Minister, P. Chidambaram at Bancon2012

On Day 1, the Finance Minister, P Chidambaram began his speech to BANCON 2012 delegates with an analogy: the financial system is the lifeline of any economy and banks are like the heart in a body; the heartbeat reflecting the state of health, whether or not the nation is pulsating with life.

He wanted PSUs to participate more fully and to make it happen, the next IBA Chairman should be from a PSU. He then went on to state that the world economy is still in a crisis despite efforts to stabilize it and many countries are still in depression; advanced economies in steeper decline. India has to find ways and means to use resources and funds for growth. The country’s financial growth rate cannot be less than 8%; this is not an aspiration, but an imperative. Income and job generation depend on this growth. The President of India declared 2010-2020 as as the decade for innovation.

He referred to the McKinsey report he had released: Creating a virtuous innovative cycle and mentioned what one of the essays highlighted:

1)      New customers – Farmers are good customers as they borrow and repay. Same with students and women who want to enhance their economic status through self-employment loans. But banks still need to find more such new customers. People queue up for deposits. Earlier many branches feared they would not mobilize enough savings in rural areas, but their fears were unfounded. The Hon’ble Minister gave his own example, of how he was born and raised in a small village which has mobilized 15 crore as deposits. It is the bank’s duty to seek such depositors.

2)      New offers/products – The Finance Minister mentioned the cards that have particularly helped the farmer such as the Kisan credit and the one he himself launched, minutes ago; the Ru-Pay card in association with NABARD that equipped farmers with the opportunity of financial inclusion. It has elevated mobile banking to a new realm; under its umbrella 1 lac ATMs are channelized for farmers to make cash less payments. It is also linked to AADHAR numbers and AADHAR is also another innovation.

3)      New way of doing things - Electronic banking will help reach customers as banking is a service not a product of commodity. Brick-and-mortar banks encourage “lazy banking” as it forces the customer to come to the bank, not the other way round. Every rural family should have an account. Most people want to borrow extremely small accounts like ten thousand rupees; banks should focus on such customer-centric needs.

4)      New business models – Simply put, look at things differently. Quoting Sherlock Holmes, “…if you want to hide something, place it on the table. The Finance Minister further explained that most obvious ways of doing things escape us. He continued in the same vein, “drawing on the strength of our postal system.” He is opposed to uniformity and further added that banks cannot clone each other. Goals are common but paths should be different banking systems with their own dominant regional flavor and functioning.

Among various other things the Finance Minister acknowledged that India will be the third largest economy and hence consolidation of top banks is required but local area banks (started in 1996) should not be dwarfed.